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Groupon Sinks as Cash Flows Plunge

Written by: Chris Ciaccia02/27/13 - 4:30 PM EST

Tickers in this article:
GRPN

NEW YORK (TheStreet) -- Groupon shares plunged after the daily deals company missed Wall Street estimates.

Chicago-based Groupon reported a fourth-quarter adjusted loss of 5 cents a share on $638.3 million in revenue. Analysts polled by Thomson Reuters were looking for earnings of 3 cents a share on $638.4 million, while the Estimize consensus called for Groupon to earn 1 cent on $627.49 million in sales.

Included in the adjusted loss was a loss of 7 cents a share from discontinued items, making the net loss attributable to shareholders 12 cents a share.

The main culprit driving the net loss to shareholders was a 61% decline in operating cash flow. Operating cash flows during the fourth quarter were $65.7 million, compared to $169.7 million in the fourth quarter of 2011. Free cash flow fell 83% year over year to $25.7 million. At the end of the quarter, Groupon had $1.2 billion in net cash and cash equivalents.

CEO Andrew Mason tried to put a positive spin on the results. "Record billings growth this quarter is a clear signal that customers love Groupons," he said, in the release. "We will continue to invest in growth through 2013 as we see new opportunities to give our customers what they want."

The company provided first-quarter guidance that was sharply below Wall Street expectations. It expects sales to be between $560 million and $610 million, a year-over-year increase of between 0% and 9%. Wall Street analysts are expecting $647.7 million. Operating (loss) income for the first quarter 2013 is expected to be between $(10) million and $10 million, compared with $39.6 million in the first quarter 2012.

Groupon did note that operating income is expected to increase year-over-year in 2013, but did not say by how much. The company will hold a conference call at 5 P.M. EST to discuss the results.

Shares of Groupon jumped during the regular session, gaining 7.75% to finish at $5.98. The stock is moving lower in extended-hours trading, down 24.25% to $4.53 according to Nasdaq.com.